As a performance measure, Return On Investment (ROI) is used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. So, when looking for improvement in business performance, focussing on ROI is a good idea, right?
But how do you achieve it? And why do a lot of organisations start down the Lean path and not achieve the high expectations that they were promised? It’s really quite simple. It depends on how you do it and more importantly, it depends on how you lead it.
An Enterprise level transformation that is truly led by an enlightened leader, that focusses on habits and develops a Lean habitat where people are free to grow in a waste free culture, will deliver exceptional levels of ROI, maybe even as high as 20 X
That kind of true leadership and employee engagement can take years to develop and relies on constant learning and relearning on new ways of working, as well as unlearning the existing ways (this part is often missed).
So, do we have to wait decades for our whole organisational culture to change before we get any payback to a Lean transformation? Of course not, but again it’s down to how you achieve it.
If you focus on Value Stream (and support stream) improvement with a 3 to 5 year strategy that has identified the critical processes for improvement, engages the whole value stream work force and has established the right support structure, then yes you can have it now. Maybe even as high at a 10 X ROI. That is definitely something worth striving for.
But watch out. What often happens is that we want this kind of improvement, and then delegate the responsibility for delivering it to others. Maybe Leaders are too busy? We are also taught to delegate, so this is pushed down to an improvement team who aren’t actually leaders of the organisation. They may well be extremely capable and enthusiastic, but unfortunately often without sufficient authority so the focus is lost, and the transformation becomes a secondary mission.
Can you still get results? Of course, but the impact may be more sporadic, isolated, and probably not enduring; and in terms of ROI, may be only 2 X to 3 X. Worst case zero.
The good news is you can achieve the results that you want. The way to achieve it is available to you. You just need to choose how you are going to do it, and what kind of ROI and improvement culture you want to develop.